Eastern Europe's energy challenge: meeting its EU climate commitments

August 5, 2010 | 00:00

Eastern Europe’s energy challenge: meeting its EU climate commitments

This study of eastern Europe's painful energy adjustment over the past 20 years concludes that the region has, overall, done well in wasting less energy and in cutting CO2 emissions, but stresses that it could do far better. Central and eastern Europe is still a veritable orchard of low-hanging fruit, in terms of potential efficiency improvements and renewable energy increases, for the European Union to grasp.

The European Union‟s 2009 package of energy and climate agreements – which had the overall aim of a 20 per cent cut in Europe‟s emissions by 2020 – were only grudgingly accepted by the EU‟s 10 central and eastern member states. Their acceptance came only after concessions allowing them slower implementation and softer targets on some of the package‟s elements. Any further reduction in EU emissions – to 30 per cent, as has been proposed – will involve eastern Europe doing more, not less, because this region, proportional to its size and population, holds Europe‟s biggest potential for extra energy efficiency and for renewable energy.

The policy recommendation is for a new EU energy and climate deal. This would involve a trade-off in which the older, richer member states in western Europe would pay more to the newer, poorer member states of central and eastern Europe, to encourage them to do more to reduce their CO2 emissions. This should take the form of:

  • allowing, even requiring, a far larger portion of the EU structural aid allocated to central and eastern Europe to be spent on energy efficiency and renewable energy. This would better align the EU‟s budget with its declared priority on climate policy. The opportunity to do this arises with the imminent start of preliminary negotiations for the next EU financial settlement for the period of 2014–20. As it happens, the rotating presidency of the EU will be, throughout 2011, in the hands of two new member states, first Hungary and then Poland. They should be pro-active in this negotiation, not just passively reactive as new member states have previously tended to be on climate policy.
  • Europeanizing national renewable energy support schemes so as to allow pan-European trade in renewable energy, or renewable energy certificates. The aim would be to allow money – from the larger national subsidies offered by richer and more ambitious western European states such as Germany, Spain, and Denmark – to be invested in areas of higher renewable energy potential in central and eastern Europe. Eventually, to preserve its single market, the EU will have to bring some pan-European discipline to national renewable energy subsidy schemes, as it does with all other forms of state aid. Given the urgency of climate action, this rationalization should occur sooner rather than later.

However, new member states cannot easily be helped if they will not help themselves, by speeding up their capacity to absorb outside funding for energy efficiency and for renewable energy projects. The governments of eastern Europe can only do this by giving climate policy the same priority as they have to energy security, where they have galvanized the EU into taking concrete measures to improve gas interconnections and storage inside the EU. They should capitalize on this success by easing their attitude to gas imports. Gas is the least polluting of the fossil fuels, and could serve as a useful transition fuel, particularly in Poland that uses so little gas and so much coal.

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